Snapchat's parent company, Snap, to kick off on the stock market at a $24 billion valuation, the biggest tech listing in years. The Los Angeles company is valued at above $30 billion.
Some Silicon Valley observers say the IPO should encourage other growing tech companies to go public, even if they're not yet showing a profit.
Twitter, for example, shot up almost 73 per cent on its first trading day and now trades well below its IPO price. After all, Snap's shareholders will still retain one lever of control: "Investors can vote with their feet", Feldman says.
In its updated IPO registration document with the U.S. Securities and Exchange Commission on Monday, Snap said it expected approximately 50 million shares of its Class A common stock purchased by investors in the offering to be subject to a separate one-year lock-up agreement.
The social media giant will sell 145 million of those shares - allowing it to raise more than $2.4 billion - while executives and early investors will pitch in 55 million shares that they amassed before the initial public offering and take proceeds of $935 million home.
Because Snap has never been profitable, Shen looked at the price-to-revenue ratio for Snap and several of its peers, rather than the more conventional price-to-earnings ratio normally used when valuing a stock. Other public internet companies like Facebook and Google do not mention Snap in their quarterly and annual reports. That left the company with a market cap north of $28 billion.
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The company contemplated higher prices after receiving 10 times the demand as shares being offered, according to a source familiar with the deal not authorized to comment on private discussions. Snap has 158 million daily active users. In 2016, the company garnered revenues of $404 million but lost $515 million.
Last year, it reported sales of $US405 million and a net loss of $US515 million.
It is now 39% down on its offer price - its user growth and other metrics consistently proving disappointing for investors.
Co-founder 26-year-old Evan Spiegel was introduced to investors as a "once in a generation founder" but critics said the firm faces intense competition from larger rivals including Facebook.